auditing standards (GAAS) and list the standards of each category, accounting homework help

As an auditor, the following situations have caused you to become concerned regarding an upcoming external audit:

• Due to timing constraints, the audit will commence in mid-February once the month-end books are closed. The external auditors are not allowed to examine the end-of-the-year physical inventory count, or other important end-of-the-year procedures.
• The external audit manager on the engagement owns stock in the company that will be audited.
• Due to the timing of the audit procedures and staffing, some areas of the audit will not be done, although there are major areas of concern.
• The auditor learned that some transactions performed in the accounting department may not comply with generally accepted accounting principles (GAAP).
• One of the team members on the audit engagement is assigned to perform the testing of the IT controls. However, the auditor has never done this type of work before, nor has the auditor ever had training in IT.

Generally accepted auditing standards (GAAS) includes three separate areas or standards which are required to be followed. Each major subcategory is then broken down into ten separate rules. There is some concern that some of the situations mentioned above could potentially be in violation of the GAAS standards. As such, the GAAS standards must be compared to the audit program to detect any potential violations Complete the following:

• Create a list of the standards and categorize each in the appropriate category.
• Identify all standards that could be in jeopardy of violation
• Include an action plan with the appropriate steps to take to ensure compliance.
• or similarities do you see between your posting and other classmates’ postings?

For assistance with your assignment, please use your text, Web resources, and all course materials.

• Objectives:
  • Discuss the application of audit theory, GAAS, and a professional code of practice in conducting an audit.
• Model Answer:

The students are graded on the quality and originality of their posts and responses, not the quantity.

Students should identify the 3 categories of the generally accepted auditing standards (GAAS) and list the standards that are included in each category. Students should identify which standard is being violated by each situation mentioned above and determine what corrective action should be instituted.

General Standards

• (Violation) The external audit manager on the engagement owns stock in the company that will be audited.
• (Violation) One of the team members on the audit engagement is assigned to perform the testing of the IT controls; however, the auditor has never done this type of work before, nor has he or she ever had training in IT.

Standards of Fieldwork

• (Violation) Due to timing constraints, the audit will begin in mid-February after the books have been closed. The external auditors will not be able to examine the end-of-the-year physical inventory count or other important end-of-the-year procedures.
• (Violation) Due to the timing of the audit and staffing, some areas of the audit will not be done, although there are of some concern.

Standards of Reporting

• (Violation) The auditor learned that some transactions performed in the accounting department may not comply with generally accepted accounting principles (GAAP).

Again, students should also include the corrective actions that they deem appropriate for each situation or violation.